Media Library upload incomplete since 4.7.1

[ Moderator note: moved to Fixing WordPress. ]

Since upgrading to 4.7.1 when uploading any image to the Media Library the upload completes OK but then fails to display the image, I only get the default image icon either as a thumbnail in the Lirary or when linked to a Page or Post.

I have purged all caches, purged browser caches, disabled plugins, and completed all the standard troubelshooting suggestions.

Only way I can currently refreence a new image is to ftp it to the upload directory and diectly link it to the Page or Post.